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Biotech / Medical : Ligand (LGND) Breakout! -- Ignore unavailable to you. Want to Upgrade?

To: Henry Niman who wrote (16197)	3/4/1998 7:29:00 AM
From: Henry Niman	Respond to of 32384

Here's more on GLX/SBH merger: The Wall Street Journal -- March 3, 1998 International: Investors Will Press SmithKline, Glaxo to Resume Merger Talks ---- By Stephen D. Moore and Robert Bonte-Friedheim Staff Reporters of The Wall Street Journal Institutional investors who saw potentially big profits disappear following the collapse of $70 billion merger talks between Glaxo Wellcome PLC and SmithKline Beecham PLC hope to prod the two companies back to the bargaining table or encourage a hostile takeover attempt by Glaxo. Over the next few days, the companies will meet with big U.K. institutional investors in the traditional meetings held following the announcement of full-year financial results. Several big institutional investors insisted yesterday that they will urge both companies to return to the negotiating table, resolve the delicate "social issues" involving distribution of top management posts and deliver the giant merger as originally promised. Some others say they would support a hostile bid by Glaxo. Both scenarios face big hurdles. A friendly merger is difficult to imagine because of the bitterness that now characterizes the relationship between the two companies. As for a hostile takeover, the cost would be prohibitive. But the investors say they will try to make something happen. Fuming about "management egos grown so great that they can stand in the way of GBP 20 billion ($32.89 billion) of shareholder value," fund manager Neil Woodford of Perpetual PLC was dismayed that "the nonexecutive directors have not bashed some heads together -- which is really what they're there to do." The talks collapsed after SmithKline accused Glaxo of reneging on a promise to give SmithKline Chief Executive Officer Jan Leschly the same post at the combined company. As part of SmithKline's damage control effort last week, Mr. Woodford received a phone call from the head of SmithKline's investor-relations department. "But I found the explanation was fairly unbelievable. . . . He was whittering on about cultural differences and devolved management style," the fund manager groused. So at a meeting with Glaxo executives at the end of this week, Mr. Woodford said he plans to declare that Perpetual "would lend our support if some of the other larger shareholders in this country agitated for a change in direction." Such ferment appears to be widespread among fund managers. "Once they hold that carrot up to investors, they can't take it away and think nothing will happen," said Liz Thom of Edinburgh Fund managers, a Scottish investment fund with big holdings in both Glaxo and SmithKline. "The merger has such enormous potential benefits that one way or another, something else has got to happen and pressure will come to bear from different directions." One possibility would be an estimated GBP 50 billion hostile bid by Glaxo for SmithKline -- and some investors are so fed up that they're prepared to support such an assault as the next best thing to a merger. "We think a hostile deal is doable and desirable," said Steve Payne, an investment analyst at Scottish insurer Abbey Life Group PLC, another big shareholder in both Glaxo and SmithKline. "The biggest stumbling block here seems to be a personality clash between Glaxo Chairman Richard Sykes and Mr. Leschly, and we need to get their egos out of the way to get the deal done," Mr. Payne added. "Someone is going to have to step aside -- and right now the only way you can see that happening is for Glaxo to go hostile."

To: Henry Niman who wrote (16197)	3/4/1998 7:32:00 AM
From: Henry Niman	Read Replies (1) \| Respond to of 32384

J.P. Morgan seeks the big boys cooling down: Dow Jones Newswires -- March 4, 1998 JP Morgan/Glaxo -2: Sees 'Merger Heat' Easing LONDON (Dow Jones)--J.P. Morgan Securities Ltd. cut its rating Wednesday on Glaxo Wellcome PLC (GLX) to 'market performer' from 'buy.' Analyst Mark Becker also dropped his 1998 earnings per share forecast for Glaxo to 53.7 pence from 56.2 pence and his 1999 forecast to 61.9 pence from 62.6 pence. 'We highlight the lower than expected results in anti-virals (both Valtrex and AZT) in 1997 and project a similar level of performance over the next two years,' he said. The analyst also predicted that 'merger heat' in the industry will eventually die down, resulting in a setback to PE levels of up to 10%. 'The pharmaceutical sector's PEs are trading at historically high levels not seen in the last 25 years,' he said. 'We believe that over the next six months, most pharmaceutical stocks will trade sideways,' he added.